Financial Independence

Financial IndependenceMy dad (God rest his soul) used to drive me nuts as a kid; he was determined to impart his entrepreneurial wisdom to me and never missed an opportunity to educate me on the importance of financial independence.

“It’s not about being rich,” he would tell me, “though there’s nothing wrong with that.  It’s about being able to live comfortably on the income that you’ve got coming in from your own personal resources.”  As a kid, I wasn’t sure what that meant, but I filed it away for future reference.

“You know what the difference is between the rich and the poor?” my dad would ask me.  “The rich invest their money and spend what’s left.  They never touch the principal.  The poor, on the other hand…the poor spend their money and never have anything left to invest.”  According to my father, that was the predominant reason why the poor were never able to reach financial independence.

Both of my father’s  parents immigrated to the United States from Italy.  At that time, Italians were “low man on the totem pole,” and facing the barriers of language and education, my grandparents struggled to earn a living.  However, they were determined to live the American dream and they reached for it with both hands and held on tight.

My grandmother was a highly skilled seamstress and earned a living creating “copies” of the most coveted current fashions for the wealthy women of Springfield, Massachusetts.  My grandfather enlisted in World War I and was assigned to work in the laundry.  Between them, they saved and learned enough about commerce and laundry that my grandmother was able to secure a start-up loan (she had to go out of state to find a bank willing to loan money to a female immigrant) and she and my grandfather started West Side Dry Cleaners in West Springfield, Massachusetts.

The passing years saw them through the depression and ultimately, my grandfather’s death in the early 1950s; my grandmother became a widow at 48.

Undeterred, she continued to run the business and to put her dollars to work for her:  This was a favorite lesson of my father’s.  “Make your money in anything you want,” he would tell me, “but invest it in something that creates a passive income for you.  Make your money work for you even when you’re not working.”  My grandmother did this by investing in real estate.  She had large holdings of commercial and rental properties and received a steady income from their rental. She also bought a home on a large parcel of land that allowed her to build her own house on the same lot, sub-divide, and sell off the first home, completely paying for the original home as well as the second, which she lived in, mortgage-free!  Smart use of capital.

My grandmother invested in stock, too, but as my dad cautioned, my grandmother never invested what she wasn’t prepared to lose.  “Never put all of your eggs in one basket,” my father would tell me.  “Invest in the market if you want to, but never invest what you’re not willing to lose, because the markets are volatile and it’s difficult at best to consistently come out a winner.”  Sage advice, particularly in this post-Madoff era.

When my grandmother retired, she was able to pass the dry cleaners on to my aunt and uncle and she lived very comfortably for another 30-plus years on the income from real estate investments and stock dividends.

And finally, my dad’s most frequent lesson:  “Watch the pennies and the dollars will take care of themselves!”  I can’t tell you how often I would make a piddling purchase and my father would tell me that I was wasting my money.  “But dad,” I would say, “it’s only a dollar.”  Only a dollar?  Nothing could be further from the truth.  My parent would launch into a lecture on the value of a dollar, what it represented in terms of time (a rare and fleeting commodity more valuable than capital) and effort, and how that tied into my personal value to the marketplace.  My simple dollar spent on “junk” became symbolic of the difference between wages and profits.  Again, I filed it all away for future reference, even as I grumbled over what I thought was tight-fisted unfairness!

Now, years later, I recognize the wisdom of my father’s lessons.  Financial independence is our American heritage.  As I raise my children with the same truisms learned from my father and my grandmother, I am reminded over and over again of the value of a dollar.  When I caution my children about their spending and I hear “But mom…it’s only a dollar!” I remind them to watch their pennies and their dollars will take care of themselves.

The reward?  My kids are now cognizant of the value of a dollar and what it has the potential to do for them.  They are much less likely to waste their own hard-earned dollars buying junk at Stuff-mart and are always looking for ways to invest their money in enterprises that will continue to generate income for them. My kids, like me and my father and grandmother before me, share the indomitable spirit of the American Entrepreneur and are motivated by the attainable goal of financial independence, our American heritage!

My dad and my grandmother would be proud to know that the apple didn’t fall far from their tree!



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